UMVA has learned that Ohio lawmakers have approved an $875 million payment package to settle a sprawling Medicaid reimbursement dispute with nursing homes.
The Ohio Supreme Court recently ruled that the state used an incorrect formula to calculate quality‑based Medicaid payments, shortchanging providers by hundreds of millions of dollars.
In response, a budget correction bill now headed to Governor Mike Dewine’s desk earmarks roughly $310 million from state funds and $565 million in federal dollars to correct the underpayments.
The dispute stretches back to the 2024‑25 budget cycle, when Ohio’s Medicaid program began paying nursing homes a daily rate for residents and added bonuses for facilities meeting strict quality benchmarks.
Operators argued the original methodology failed to account for the medical complexity of the sickest patients, effectively reducing reimbursements for those caring for the most vulnerable elders.
Although the formula was later revised, the state remained liable for payments tied to earlier budget cycles, inflating the financial stakes as the case progressed through the courts.
Legal filings warned that recalculating the payments under the court’s interpretation could add about $285 million per year, potentially approaching $1 billion over two budget cycles.
Under the new legislation, providers that accept the $875 million settlement must waive any future legal claims related to the disputed formula.
State Rep. Jean Schmidt called the move “the most egregious thing we could have done to individuals that help our elderly live a quality, comfortable life,” adding that the correction restores justice for those caregivers.
Scott D. Wiley, CEO of the Ohio Health Care Association, urged Governor Dewine to sign the bill without delay, emphasizing the critical importance of the funds for providers and the families they serve.
